Maximizing Rental Income: Strategies for Investors in Property Management

Maximizing Rental Income

Property investing should never be set and forgotten; You need to be present, aware and ready to act if there is a chance to increase your income and reduce your expenses.

Even the smallest boosts to rental income can add up over time, and if you have multiple properties in your portfolio, the earnings are compounded.

Even adding $20 a week is $1000 a year. And if you have 10 properties, that’s $10,000 a year.
So here are some things you need to think about when looking to maximise your return.

Be aware of market value

Rents have been rising consistently over the past few years in most markets around the country. This is because there are a lot more people looking for rentals than there are properties available. The result has been record-low vacancy rates and savvy investors can raise their asking rent to a new level each time their tenants’ lease comes up for renewal.

If you haven’t reviewed your rent for the last year or two, you’re almost certainly missing out on income.
It’s imperative you get the market rate. You wouldn’t work your job for less than a fair, market salary, so why treat your other income streams any differently?

Analyse other asking rents of similar properties in the area and engage a property management firm such as Blackwater Real Estate for an estimation.
If the rent is $50 a week lower than it should be, that adds up to more than $2500 a year you are missing out on.

Add value on a budget

You can boost your asking rent and also your resale appeal with small actions that don’t have to break the bank. Some simple tweaks you can make include fresh paint, modern fittings and fixtures in kitchens and bathrooms and even landscaping. Competition is strong between renters now, but having a property that is actually nice to live in will take that to a new level.

Another way to add value is to install energy-efficient appliances and features such as solar power if it suits your property. These will provide a point of difference as they reduce bill costs for tenants and can appeal to the environmentally conscious.

Hang on to the good ones!
If you have good tenants, it can be worth trying to keep them long-term by allowing them to make personal changes to your property or offering to not raise rents (or discount the increase) for a fixed period if they commit to long-term leases.

Even in a strong market, turning over tenants every 6 or 12 months can eat into your returns in the form of advertising and leasing costs.

And if they’re happy, they are generally more likely to treat your property better, which will allow it to hold its value in future.

Here we go again…

Christmas doesn’t seem that long ago, but already we’re talking about tax again. Staying informed about tax deductions equals more money each financial year.

There are property management fees, interest paid on mortgages and maintenance costs, but it’s also worth speaking to a finance professional about different ways you can structure your investments and finances to maximize tax returns.

Go where the money is
When planning your next investment, don’t just think about the bargain on offer, but what the location you choose could mean to you and your long-term goals.

A suburb may have cheap properties with decent rents, but there’s no point picking up a bargain in a town of 2000 people, only to have the one factory that employs most of the residents close. You could find yourself with no re-sale value and no one to pay your rent.

Look at the local market. Does it have multiple employment hubs, educational institutions, or proximity to public transport? Are young workers moving in or out of the area? Are there infrastructure projects or significant developments planned?

Finally, what is the local vacancy rate? Most Aussie capitals are sitting at 1% or lower in 2024, meaning it is very much a landlord’s market. Generally, anything lower than 3% suits landlords, while anything higher can mean you are risking costly vacancy periods.